FMA and OeNB welcome the decision adopted yesterday by the Basel Committee to strengthen global capital standards. The minimum capital requirements, increased in accordance with demands, and the improved quality of capital instruments will better equip banks to cope under pressure and thus reinforce the stability of the financial markets on a sustainable basis.
The hike in the core Tier 1 capital requirement (paid-in capital plus retained profit) from 2% to 4.5% and the additional introduction of a capital conservation buffer of 2.5% represent a welcome quantitative and qualitative strengthening of banks’ equity. The aim is to enable them to better absorb crisis-induced shocks from their own reserves in the future. A core Tier 1 capital of at least 7% (including the capital conservation buffer), combined with increased capital requirements to cover trading, derivative and securitisation activities and the introduction of global standards governing banks’ liquidity, mean the right lessons are being learned from the events of the global financial crisis.
At the same time, appropriate transition periods extending over multiple years and the option to count capital support measures granted during the crisis towards the minimum requirements through to 2018 have ensured that the banks have sufficient time to adjust their business models. This comprehensive and balanced package of measures under the Basel III banner will build confidence in the financial markets. It will therefore make a tangible contribution to market stability and sustainable economic growth.
The task now is to implement the Basel III package quickly around the world, without allowing it to become diluted. In Europe, these new standards are still to be adopted by the European Council and the European Parliament. Nevertheless, this accord of the Basel Committee has provided banks with the security they need to plan ahead. It is now, therefore, imperative that Austrian banks continue the process of consistent strengthening of their capital.
For further information please contact
Klaus Grubelnik (FMA Media Spokesperson)
+43/(0)1/24959-5106
+43/(0676)/882 49 516